Securities haircuts under SEC Rule 15c3-1 are percentage deductions taken from the market value of a broker-dealer’s securities positions when computing net capital. The percentage depends on how liquid and price-stable the security is: a Treasury bill maturing next week takes no haircut at all, an exchange-listed stock takes 15 percent, and a security with no ready market takes 100 percent and contributes nothing to regulatory capital. The deductions create a cushion that absorbs losses before they reach customers, and the schedule below is the working reference most compliance teams live by.
Haircut Rates by Security Type
Rule 15c3-1 assigns percentages to broad asset classes, scaled to reflect how quickly and reliably each type of security can be sold at close to its quoted price.
U.S. Government Securities
Treasuries take the smallest deductions because they trade in the deepest market in the world. Rates run from zero on bills maturing in less than three months up to 6 percent on bonds with 25 years or more remaining, with half-percent or one-percent steps at each maturity bracket in between. A five-to-ten-year Treasury note carries a 4 percent haircut. Canadian government debt gets the same treatment as U.S. Treasuries.
Municipal Securities
Short-term municipal notes issued at par or at a discount with original maturities of roughly two years or less take very low haircuts, starting at zero for maturities under 30 days and reaching 1 percent as maturities approach two years. Longer-term municipal bonds face higher deductions: 1 percent for less than one year to maturity, rising through several brackets to 7 percent for bonds with 20 or more years remaining. That top rate sits above the 6 percent Treasury ceiling because municipal trading markets are thinner and carry more credit risk.
Investment-Grade Corporate Debt
Nonconvertible corporate bonds with fixed rates, fixed maturities, and minimal credit risk follow a schedule similar to municipals but heavier at the long end. Bonds with less than one year to maturity take 2 percent; those with 25 years or more take 9 percent. Hedged positions get reduced haircuts, as low as 1.5 percent for short maturities and 3 to 3.5 percent for bonds beyond 15 years, depending on the hedge.
Equity Securities
Stocks and other equities with a ready market carry a flat 15 percent haircut. That single rate covers most equities traded on national exchanges. If a stock has only one or two independent market makers providing regular quotes, the deduction jumps to 40 percent. Equities with no ready market at all take a 100 percent haircut.
Commercial Paper, Bankers’ Acceptances, and Certificates of Deposit
Short-term money market instruments with minimal credit risk get the lightest treatment of any non-government security. Commercial paper and CDs maturing in under 30 days take zero; those approaching one year take 0.5 percent. Negotiable CDs or bankers’ acceptances with more than one year remaining are treated the same as U.S. government securities of comparable maturity.
Foreign Sovereign Debt
Government bonds from countries other than the United States and Canada follow a separate schedule. Fixed-rate, fixed-maturity bonds with minimal credit risk that are not in default take 2 percent for maturities under one year, scaling to 9 percent at 25 years or more. Foreign sovereign debt that falls outside those criteria takes the standard 15 percent equity-class deduction.
Options, Derivatives, and Repos
Some position types don’t fit the flat-percentage schedule.
Options
Appendix A provides two methods. The theoretical pricing method uses a model (approved by the firm’s examining authority) that calculates gains and losses at ten equidistant valuation points across a specified price range: plus or minus 15 percent for equity options, plus or minus 10 percent for options on high-capitalization diversified indexes, 6 percent for major foreign currency options, and 20 percent for all other currencies. The haircut equals the largest theoretical loss across those points, subject to minimum charges.
The strategy-based method assigns deductions by position type. Uncovered calls and puts take a haircut equal to the standard percentage for the underlying security’s market value, reduced by any out-of-the-money amount, with a floor of $250 per contract or 50 percent of the standard deduction. Long option positions take 50 percent of market value. Spreads holding both a long and short option in the same class get favorable treatment: the deduction is limited to the difference in exercise values, and if the long leg has an exercise value equal to or less than the short leg, no deduction is required.
Credit Default Swaps
Non-cleared CDS haircuts scale to both maturity and the reference entity’s credit spread. Selling protection with a spread of 100 basis points or less and less than 12 months to maturity takes 1 percent of notional; the same maturity with a spread of 700 basis points or more takes 15 percent. At 120 months or more, rates run from 10 percent for tight spreads to 50 percent for wide ones. A firm buying protection takes half the selling-protection amount, capped at the position’s current market value.
Repurchase Agreements
For reverse repos (the firm lends cash and takes securities as collateral), the deduction equals any deficit, meaning the amount by which the contract resale price exceeds the collateral’s current market value. That deficit can be reduced by margin deposits held, excess collateral from other reverse repos with the same counterparty, or margin calls outstanding one business day or less. Deficits on reverse repos with the Federal Reserve Bank of New York are disregarded entirely.
For repos (the firm borrows cash and pledges securities), the rule stacks three separate tests. First, single-position deficits above a collateral-based threshold are deducted: 5 percent of contract price for Treasuries, 10 percent for agency securities and mortgage-related instruments, and 20 percent for everything else. Second, aggregate deficits with any single counterparty exceeding 25 percent of pre-haircut net capital trigger an additional deduction. Third, total aggregate repo deficits across all counterparties exceeding 300 percent of pre-haircut net capital produce yet another charge. A firm with large, concentrated repo exposure can face severe capital consequences from these stacked thresholds.
Digital Assets
Digital asset treatment has been evolving through SEC staff guidance rather than formal rulemaking.
For payment stablecoins (USD-denominated tokens issued by regulated entities with reserve backing, redemption policies, and monthly attestation reports), the SEC’s Division of Trading and Markets indicated in February 2026 that it would not object to broker-dealers applying a 2 percent haircut on proprietary positions. That rate aligns with the haircut for money market fund shares. Before that guidance, some firms had been applying a 100 percent haircut on stablecoins, which made holding them in inventory uneconomical.
For bitcoin and ether, FINRA’s 2026 oversight report notes that SEC staff will not object if a broker-dealer treats proprietary positions in those assets as readily marketable for purposes of applying the 20 percent commodity haircut under Appendix B of Rule 15c3-1. This is a meaningful shift from earlier uncertainty about whether crypto assets could count toward net capital at all. Because the guidance is staff-level, firms should monitor for changes.
What Pushes Haircuts Higher
Maturity
Across every debt asset class, longer maturities produce larger deductions. A 90-day Treasury bill barely moves in price when rates shift, so nothing is deducted. A 30-year Treasury can lose meaningful market value from the same rate change, so it takes 6 percent. The same pattern runs through municipals, corporates, and foreign sovereigns.
Undue Concentration
When a broker-dealer holds a position in a single issuer (including any options on that issuer’s securities) worth more than 10 percent of the firm’s net capital before haircuts, the rule imposes an additional concentration charge. The extra deduction equals 50 percent of the normal haircut percentage on the portion exceeding the 10 percent threshold. For equity positions in the 15 percent general category, the additional charge is a flat 15 percent on the excess. The capital cost of concentration accelerates quickly.
No Ready Market
The rule defines a ready market as a recognized securities market where independent buy and sell offers exist, a price reasonably related to the last sale can be determined almost instantly, and settlement occurs within the normal trade cycle. Securities that fail this test, along with any securities that cannot be publicly sold because of legal or contractual restrictions (like Rule 144 restricted stock), take a 100 percent haircut. Moving a single position from 15 percent to 100 percent can wipe out a firm’s capital cushion, which makes this the most consequential determination a compliance team makes.
Aged Fails to Deliver
When a broker-dealer fails to deliver securities on time and the failure persists, the rule requires a haircut on the contract value. For most securities the deduction kicks in after 5 business days. Municipal securities get 21 business days. The examining authority can grant extensions of up to 5 additional business days, with one further 5-day extension possible in unusual circumstances. For firms with high trading volumes, aged fails can quietly erode net capital.
How the Deduction Feeds Into Net Capital
The arithmetic is straightforward. Take the current market value of each position, multiply by the applicable percentage, and subtract. A $10 million position in 10-year Treasury notes takes a 4 percent haircut for a $400,000 deduction, leaving $9.6 million in regulatory value. A $5 million equity position at 15 percent loses $750,000, counting as $4.25 million.
Both long and short positions take haircuts. A short position exposes the firm to loss if the security’s price rises, so the same percentage applies to the absolute market value of the short. Once every position has been individually adjusted, the firm sums the regulatory values to arrive at total adjusted capital. That aggregate must exceed the firm’s minimum net capital requirement at all times, not just on reporting dates. The minimum itself depends on the type of business the firm conducts and ranges from $5,000 for firms that never touch customer money or securities up to $1.5 million for prime brokers, with $250,000 for firms that carry customer accounts.
What Happens If Net Capital Falls Short
The moment net capital drops below the required minimum, the firm must notify the SEC and its examining authority the same day. Separate 24-hour notice is required at “early warning” triggers: aggregate indebtedness exceeding 1,200 percent of net capital, net capital falling below 5 percent of aggregate debit items for firms using the alternative method, or total net capital dropping below 120 percent of the required minimum. A firm in deficiency generally cannot open new customer accounts or execute new trades until capital is restored.
The SEC can bring cease-and-desist proceedings under Section 21C of the Securities Exchange Act, order corrective steps, and require disgorgement of profits and interest. If a violation is likely to cause significant harm to investors or dissipation of assets, the Commission can enter a temporary order immediately, before a full hearing. FINRA can independently fine, suspend, or bar firms and individuals. FINRA fined Charles Schwab $2 million after the firm experienced net capital deficiencies ranging from $287 million to $775 million on three occasions within a two-month window in 2014, caused by $1 billion overnight transfers to its parent company.